GM Financial acquires most of Ally's auto finance business in Europe, Latin America

Melissa Burden / The Detroit News

Posted:
04/02/2013 07:35:47 AM MDT

Updated:
04/02/2013 11:58:00 PM MDT

General Motors Co. subsidiary General Motors Financial Co. Inc. said Tuesday that it has closed on most of Ally Financial Inc.'s auto finance and services business in Europe and Latin America.

Detroit-based Ally, a leading new car lender, said Tuesday it had received about $2.6 billion from the sale.

The acquisition, which was announced in November, includes operations in Germany, the United Kingdom, Italy, Sweden, Switzerland, Austria, Belgium, the Netherlands, Chile, Colombia and Mexico, and greatly expands GM Financial's capabilities and is expected to boost sales for GM. GM Financial will offer retail and lease financing and dealer loans, among other services.

"Completing the purchase of these operating units is an important step in ensuring the availability of competitive financing for GM customers and dealers worldwide," said GM Financial President and CEO Dan Berce in a statement. "Having a strong international auto finance capability will allow us to expand our support of GM's global growth strategy beyond the U.S. and Canada."

Employees from Ally will transition to GM Financial without disrupting service to customers and others, GM Financial said.

Ally and GM Financial also have agreed that GM Financial would purchase Ally operations in France, Brazil and a 40 percent stake in a joint venture in China . But those deals are still pending regulatory approvals. Ally said they will close in stages during the year.

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The complete deal between the parties including France, Brazil and the joint venture stake, was expected to total $4.2 billion.

Ally said it received about $2.4 billion at closing and $190 million in dividends previously. Ally will receive more proceeds once each of the other three transactions with GM Financial closes, said Ally spokeswoman Gina Proia.

"Completion of this transaction marks another major step in Ally's plans to further strengthen its financial profile going forward and to focus on its core, leading U.S.-based franchises," Ally CEO Michael A. Carpenter said in a statement. "We remain committed to further advancing our strategic plans and best positioning Ally to repay the U.S. taxpayer's investment."

Through mid-February, Ally had paid $5.9 billion back to Treasury.

In November, GM said it expected to contribute $2 billion cash to GM Financial to fund the purchase. The Detroit automaker said then that GM Financial's acquisition would help support GM customers and dealers in markets representing 80 percent of GM's global sales and would help the car company add sales with a captive finance arm.

GM Financial is expected to add $300 million to $400 million in annual earnings before taxes once the entire acquisition is completed.